Hong Kong student bed gap to hit up to 90,000 by 2029

Mainland Chinese learners made up over 70% of a 6,279 enrolment rise across eight UGC universities.

Hong Kong's purpose-built student accommodation (PBSA) market faces a shortfall of 70,000 to 90,000 beds by the 2028-29 academic year as demand from non-local students outpaces supply, CapitaLand Investment (CLI) estimated.

The beds-to-student ratio stands at 18% across the student population and 55% for non-local students. Private operators run 6% of PBSA stock, according to CLI estimates.

Mainland Chinese students drive much of the demand. Hong Kong ranks third amongst their overseas study destinations, behind the UK and the US.

"This has been supported by tighter immigration policies and geopolitical uncertainties in traditional Western destinations," the report said.

Enrolment at the eight UGC-funded universities rose by 6,279 between 2021-22 and 2024-25, against 3,009 between 2015-16 and 2021-22. Mainland Chinese students made up more than 70% of the latter increase.

Taught postgraduate and self-financed students recorded the strongest growth, and CLI said these groups tend to seek greater rental affordability. Five Hong Kong universities rank amongst the QS Top 100.

Authorities raised the non-local undergraduate admission quota at publicly funded universities from 20% to 40% for 2024-25 and will lift it to 50% from 2026-27.

The Immigration Arrangements for Non-local Graduates scheme lets eligible graduates seek work locally for up to 24 months.

Residential rents kept rising whilst prices fell after 2022, which CLI said reinforces PBSA's affordability advantage.

Some PBSA assets recorded annual rental increases of close to 8% between 2023 and 2025, Knight Frank data cited in the report showed.

Hong Kong PBSA posted rental growth of 8.0% over 2023-2025, the highest of the six market-subsectors CLI tracked, although its data cover a shorter period than those of the other markets.

It also recorded the highest interest rate, at 4.8%, and the second-lowest inflation rate, at 1.8%, behind Tokyo multifamily's 1.6%.

CLI described the sector as conversion-led, with distressed private sellers and bank enforcement-led transactions driving deals.

The Hostel in the City Scheme, launched in July 2025, speeds up the conversion of commercial buildings into PBSA.

It streamlines planning approvals, relaxes plot ratios, lets projects retain exempted gross floor area for amenities such as gyms and study rooms, and allows partial building conversions.

Student housing-related investment transactions rose from $1.3b in 2024 to $3.3b in 2025, Knight Frank data cited in the report showed.

CLI set out three strategies to raise returns. Grade B and C offices offer sizeable conversion potential, but hotels carry lower conversion costs and fewer constraints on natural lighting, ventilation and building layouts.

Post-conversion rental yields for student accommodation could reach 4.5%-5%, above yields on office, serviced apartment and residential assets.

CLI advised investors to target areas near major university clusters and transport nodes in Kowloon, where most PBSA supply and student demand sit, and assets that serve both students and recent graduates.